1. Today Agenda: Factors that shape a company's strategies
• Organizations do not exist in a vacuum. Many factors enter into the
forming of a company's strategy. Each exists within a complex network
of environmental forces.
• These forces, conditions, situations, events, and relationships over which
the organization has little control are referred to collectively as the
Submitted by :
Immani Chandra Shekar
(Reg. No: 19K61E0020)
2. In general terms, environment can be broken down into three areas:
1.The macro environment, or general environment (remote environment) -
that is, economic, social, political and legal systems in the country;
2.Operating environment - that is, competitors, markets, customers,
regulatory agencies, and stakeholders; and
3.The internal environment - that is, employees, managers, union, and board
3. In formulating a strategy, the strategic decision makers must analyse
conditions internal to the organization as well as conditions in the external
environment, which are described in the following sections:
FACTORS THAT SHAPE A COMPANY’S STATEGY
1. Analysis Of The Macro environment
2. Analysis Of The Industry
3. A Framework For Competitor Analysis
4. Structural Analysis Within Industries
5. Internal Organizational
6. Analysis Environmental Scanning
7. Forecasting The Environment
4. 1.Macro environment: The major external and uncontrollable factors that
influence an organizations decision making, and affect its performance and
strategies. These factors include the economic factors, demographics, legal,
political, social conditions, technological changes, and natural forces.
• Specific examples of macro environment influences include
competitors, changes in interest rates, changes in cultural tastes,
disastrous weather, or government regulations.
6. 2.Analysis of the industry:
• The performance of companies will depend, among other things, upon the
state of the industry to which they belong.
• Industry analysis refers to an evaluation of the relative strengths and
weakness of particular industries.
• A market assessment tool designed to provide a business with an idea of the
complexity of a particular industry. Industry analysis involves reviewing
the economic, political and market factors that influence the way the
industry develops. Major factors can include the power wielded by
suppliers and buyers, the condition of competitors, and the likelihood of
new market entrants.
9. 3. A Framework For Competitor Analysis:
• A competitive analysis framework is a model you can use to help shape
how you go about researching your competitors. It helps you home in on
specific information by giving a structure to guide your market analysis.
• A central aspect of strategy formulation is perceptive competitor analysis.
There are four diagnostic components to a competitor analysis: future
goals, current strategy, assumptions, and capabilities.
12. 5.Internal Organizational Analysis:
An internal organizational analysis evaluates all relevant factors in an
organization in order to determine its strengths and weaknesses. Some of
the areas that most businesses should analyse include the following:
13. 6.Environmental Scanning:
Environmental scanning is the process of gathering information about events
and their relationships within an organizations internal and external
environments. The basic purpose of environmental scanning is to help
management determine the future direction of the organization.
The most widely accepted method for categorizing different forms of
scanning divides into the following three types:
• Irregular scanning systems:
• Regular Scanning systems:
• Continuous scanning systems:
14. • Macro environmental and industry scanning are only marginally useful if all
they do is reveal current conditions. To be truly meaningful, such analyses
must forecast future trends and changes.
• Environmental forecasting is a technique where by managers attempt to predict
the future characteristics of the organizational environment and hence make
decisions today that will help the firm deal with the environment of tomorrow.
• Forecasting involves the use of statistical and non statistical, or qualitative
techniques. Four techniques can be particularly helpful: time series analysis,
judgmental forecasting, multiple scenarios, and the Delphi technique.
7.Forecasting The Environment: